Appraisers Feeling the Heat as Housing Market Warms Up
Appraisers will always be key players in the real estate housing market’s blame game no matter what the market is doing.
Appraisals were difficult to do after the housing market collapse of 2007 because of the lack of recently sold comparables that they had available to determine the property’s true value. Now that the Orlando real estate housing market is hot again, appraisers say that it doesn’t make their job of valuating a property an easier.
Many Orlando realtors complain that appraisals often complicate real estate deals by either forcing the sellers to lower their price or by making buyers come to the closing table. Most of the time both buyer and seller will meet somewhere in between and renegotiate the contract as opposed to letting the deal fall apart. Sometimes one or both parties will refuse to budge and the deal falls apart anyway.
There are drastically less distressed properties being sold right now which is definitely a good thing for traditional sellers hoping that their home will appraise at its contract price. The problem is that the lack of inventory in the housing market right now is prompting bidding wars well over listing prices. Unfortunately, these prices aren’t necessarily justified by an appraisal. And unless it’s a cash buyer who doesn’t care about appraisal value then it presents a big problem.
Sellers shouldn’t get overly excited about this news because even in an appreciating market, there can be a demand for one price range and not the other. The vast amount of data that appraisers look at for guidance makes it easier for them to study trends and find out how much people are willing to pay for certain features and help them to determine their opinion on how much a property is worth. I believe the problem is that in an appreciating market, a home is worth more today than it was one or two months ago, and the closed data that appraisers use is always just a little behind on what the homes are actually selling for right now.
Appraisers have always been and will always be key players in the real estate market’s blame game no matter what the market is doing. In a hot market they get blamed for over inflating property values much higher than they should as the market was peaking, and then they get blamed for being overly cautious right after the bubble burst. Even today the general feeling in the real estate industry that appraisers are still too cautious considering the undeniable improvement in the housing market.